Law Report: Lender entitled to enforce charge: CIBC Mortgages plc v Pitt and another. House of Lords (Lord Templeman, Lord Lowry, Lord Browne-Wilkinson, Lord Slynn and Lord Woolf), 21 October 1993

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A financial institution which grants a joint loan to a husband and wife is not put on inquiry of the possibility of undue influence exerted by the husband since the loan was for their joint benefit.

The House of Lords unanimously dismissed an appeal by Mrs Pitt against an order for possession of the matrimonial home.

CIBC Mortgages plc granted a joint loan of pounds 150,000 secured on the matrimonial home to Mr and Mrs Pitt. The money was paid into their joint account. Mr Pitt used the money to buy shares, was initially successful with his investments but later found himself in arrears in paying what was due under the loan. CIBC brought proceedings for poss-

ession under the charge on the home. Mrs Pitt alleged that she was induced by Mr Pitt's undue influence to enter into the transaction.

Leo Price QC and David Schmitz (Brian Hillman & Co) for the wife; Gavin Lightman QC and Nigel Clayton (Fox Brooks Marshall) for CIBC.

LORD BROWNE-WILKINSON said that Mr Pitt was not acting as agent for CIBC which had no actual notice of undue influence. There was nothing to indicate that this was anything other than a normal advance to husband and wife for their joint benefit.

What distinguished the case of the joint advance from the surety case was that, in the latter, there was not only the possibility of undue influence having been exercised but also the increased risk of it having in fact been exercised because, at least on its face, the guarantee by a wife of her husband's debts was not for her financial benefit. It was the combination of those two factors that put the creditor on inquiry.